Defaulted Student Loans FAQs

What is default and how does it affect me?

Your federal student loan is placed into default when your loan payments are delinquent and you have failed to repay your loan for more than 270 days (if you repay your loan less than once a month and you have a FFEL loan, default occurs when you fail to make a payment for 330 days).

Default means trouble. You are obligated to pay immediately the entire principal balance, interest, and any collection fees added to your loan. Defaulted student loans have no statute of limitations for enforceability, so you must repay the loan in full or set up a repayment plan with your servicer.

Default has serious consequences and can be damaging to your credit rating.

How can I review my account and get out of default?

Defaulting on a federal student loan is a serious issue which can impact your life for many years. However, you can get out of default and repair the damage to your finances. When your William D. Ford Direct Loan or Federal Family Education Loan (FFEL) is placed into default, the U.S. Department of Education (ED) assigns your account to its Default Resolution Group for collection. Read more...

I am in default on a HESC serviced student loan. How do I review my account?
Review your account by clicking on the Student Access button on the top of the page.
Can I make electronic payments on my defaulted student loan?
You may arrange for electronic payments for defaulted Direct and some FFEL loans by establishing a Preauthorized Debit Account at

If you have a defaulted FFEL program loan serviced by HESC, you can pay by credit card or authorize HESC to electronically debit your checking account for the monthly payment due on your student loan debt by enrolling in HESC's SmartCheck/SMARTPAY program.
How do I have my loan removed from default status and regain eligibility for student financial aid?
You can rehabilitate your defaulted student loan by paying the loan in full, including added fees and collection costs, or by agreeing to a reasonable and affordable payment plan and voluntarily make the agreed-upon payments on time over a specified period of time.  Learn more
What if I am having difficulty making my monthly payments on my defaulted loan?
HESC and the U.S. Department of Education (ED) will accept your monthly payments that are both reasonable to the agency and affordable to you. You can’t be required to pay more than what is considered “reasonable and affordable,” based on a comparison of your total household income and allowable expenses, along with your student loan debt. Reducing your payment will likely mean your loan will take longer to pay back and interest will continue to accrue on your balance.
I’ve received a notice that my wages will be garnished, what must I do to avoid this?
If you are in default and have failed to enter into a repayment agreement, your servicer can initiate an Administrative Wage Garnishment and take payments from your wages – up to 15 percent of your disposable income per pay period. This action may be avoided by immediately contacting your loan servicer to make acceptable repayment arrangements. Your servicer will work with you to assess your situation and help you enter into a satisfactory repayment agreement.
My payments are being withheld from my salary due to wage garnishment by HESC; how can I stop it?
Contact Default Collections by completing this webform. Generally, a substantial commitment on your part is necessary in order for HESC to consider withdrawing a wage garnishment order. If your circumstances involve financial hardship, contact HESC to discuss possible alternatives.
Why is the balance higher than what I thought I owed?
When a loan is placed in default, the costs of collecting your loan are added to the amount owed. In addition, the interest on your loan continues to accrue. Your payments are applied to the collection costs, then to interest on the loan, and only then to the principal on the loan.
I’m applying for a HUD (FHA) or VA home loan and don’t qualify because of my defaulted student loan. What can I do?
Your options for reinstating your eligibility to receive a HUD (FHA) or VA loan are: repay or satisfy the loan in full; consolidate your loan through the William D. Ford Direct Loan Program (Direct Loan Program); or rehabilitate your loan through our loan rehabilitation program. Since defaulted student loans have no statute of limitations for enforceability, you remain ineligible to receive a HUD or VA loan until you complete one of the options mentioned above. Learn more.
I was expecting a refund on my federal income tax, but received a notice that my refund will be seized. How can I get my refund?
If you have been notified that the U.S. Department of Education intends to collect your defaulted student loan through Treasury Offset, you have the right to request a review of your account and circumstances before the offset begins. Learn more.
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